"Our balanced approach of fiscal discipline, responsible management and strategic investments continues to help grow the economy, create jobs and reduce the deficit," said Sousa.

The province used a $1-billion reserve built into the budget to help cut the deficit from its April 2012 projection of $14.8 billion, while higher-than-expected revenues added $800 million to the improved figure.

Total Ontario government spending of $122.6 billion was $3.8 billion less than planned, and 0.1 per cent lower than in 2011-12, said Sousa, marking the first real decline in a decade of Liberal rule.

"No government in Canada or around the world has actually cut their spending to the extent that we have, as a percentage," he said.

"The fact is we have negative spending growth in our expenses and that is an accomplishment, but more importantly, it is a testament to the nature in which we are assessing and taking a balanced approach to our finances."

The Progressive Conservatives said Sousa confirmed their suspicion that the Liberals have no plan for Ontario's economy.

The NDP said the Liberals have "played the game of finding surprise funds" for years and using unrealistic forecasts to make themselves look like good fiscal managers.

"Ontarians want a responsible plan to balance the books in a balanced way, not one-time accounting tricks and political games," said New Democrat MPP Catherine Fife.

The Liberal government will continue to cut spending, but not in health care or education, and will invest in initiatives that "create jobs and grow the economy," said Sousa.

At $113.4 billion, revenues for 2012--13 were $0.8 billion above forecast, due largely to higher-than-expected income from government business enterprises and a one-time gain in taxation revenues, according to the Public Accounts tabled by Sousa.

Most ministries and program areas, including health care, spent less than planned.

Sousa said part of the reduction in red ink came from one-time savings from new contracts negotiated with teachers and other public sector workers. He predicted the deficit for the current fiscal year will rise to $11.7 billion but said the province remains on track to balance its books by 2017-18.

Meantime the province's overall debt continues to climb, jumping to $252 billion, but Sousa insisted the ratio of Ontario's net debt-to-gross-domestic-product was in far better shape than most jurisdictions.

"We're measuring the net debt to GDP ratio as an ability to afford it," he said. "In other parts of the world, that ratio is around 80 or 100 per cent or even higher, but in Ontario we want our target to be 27 per cent. We're now at about 37.4 per cent."

Ontario's economy continued to expand modestly in 2012--13, with growth in real gross domestic product of 1.5 per cent, lower than the projected 1.7 per cent.

Solid gains in business investment and international exports as well as continued growth in household spending were the main contributors to growth in 2012.